Derek Stevens, along with his mostly silent brother, Greg, owns Circa, the D, and Golden Gate casinos in downtown Las Vegas. The three properties share a slot club and the same ONE player’s card may be used at all three properties.
Circa checks everyone’s ID every time using a hand-held device about the size of a cell phone. I assume they capture the information on your Driver’s License in the process, but I don’t know that for a fact. The D checks your ID on weekend nights — but not always all three doors. The Golden Gate, by far the smallest of the three properties, rarely has anybody checking your ID as you enter.
Sometimes the checking is done by regular security officers. Sometimes the checking is done by what appear to be temporary employees.
Strangely, on a midweek day in mid-November, a man in a tuxedo was checking IDs at Golden Gate. I produced mine and he asked if I was there for the promotion. I read mailers fairly closely and was pretty sure that no mid-week promotion was advertised for that casino, so I asked, “What promotion?”
He told me that if I sign up for a card at the players’ club, I’d receive guaranteed free play for some amount between $5 and $1,000. I told him I already had a card, and he replied that all I had to do was to show the card and I’d get the free play.
Free money is always good.
On the way to the machines I wanted to check, I glanced over at the players’ club. There was a line of about 25 people and it wasn’t moving very fast. I didn’t see how many booth attendants were servicing the front of the line, but clearly not enough to make the line move very fast.
I figured it would take me 30-45 minutes to get to the front of the line. If I knew I was going to get $200 or more, such a wait would be tolerable. While I don’t know the distribution of the free play amounts for this particular promotion, historically in Las Vegas it goes something like 50% of the time it’s $5, 25% of the time it’s $10, 23% of the time it’s $20 or $25, and 2% of the time it’s higher than that. If those percentages held true for this promotion, my EV for standing in line for a long time was less than $10.
When I first moved to Las Vegas and was scrounging to make enough money to be able to stay, I would have stood in line. Not anymore. Today I have a bankroll, and my earning power is more than $10 per 30-45 minutes. So, I passed up the line and checked the machines I wanted to check.
Perhaps I should modify my “Free money is always good” statement to something like, “No money is totally free. Whether it’s good to get depends on what you have to do to obtain it. Correctly evaluating this is part of what makes a gambler successful or not.”
Also, please note that in no way am I criticizing the Golden Gate for their promotion. Clearly a lot of people were capitalizing on it and I would have done the same 30 years ago. It’s just that for me at this time in my life, no thank you.
A ten dollar standard Jacks or Better returns about two per cent on royals, a half per cent on straight flushes, and six per cent on four of a kinds. That’s about 8.5% of your return and that is sent to the IRS. The new gambling tax law only allows 90% of this to be deducted as loses leaving you with 10% of this, about 0.85% on which to pay taxes. If you happen to be in the 30% tax bracket, that is about 0.25%, about a quarter of one per cent. I thought that professional gamblers, video poker or others, had a winning margin of more than that. So why are all of them quitting and leaving the High Limit Rooms virtually empty? Despite a doctorate in Mathematical Engineering, I could be wrong. If you think my reasoning on the math or the analysis is incorrect, please post a blog and correct me. Thanks.
Let me explain it to you…
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Let’s say you have a 0.25% edge and your total return from playing 9/6 JoB is 100.25%.
For simplification, let’s assume 1 royal cycle is exactly 40,000 hands, and you will get 1 royal, 6 straight flushes, and 100 quads.
Your total coin-in is 40,000 * $50 = $2,000,000.00.
Your total W2G is 40,000 + 2,500 * 6 + 1,250 * 100 = 180,000.
Your profit is 2,000,000 * 0.25% = 5,000.
By the new law, 90% of the losses can be deducted (up to the max of your total W2G), so you owe tax on: 180,000 – (180,000 – 5,000) * 90% = 22,500.
For the 30% tax bracket, you will pay taxes of 22,500 * 30% = 6,750, and it makes you a loser since your profit is only 5,000. You will be net -1,750 after tax, even though you have a 0.25% edge. It lowers your edge from 0.25% to -0.0875%.
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HOWEVER, if the new W2G threshold is officially changed to $2000…
Your total W2G is 40,000 + 2,500 * 6 = 55,000
By the new law, 90% of the losses can be deducted (up to the max of your total W2G), so you owe tax on: 55,000 – (55,000- 5,000) * 90% = 10,000
For the 30% tax bracket, you will pay taxes of 10,000 * 30% = 3,000, and you will have 2000 in profit. This lower your edge from 0.25% to 0.1%.
Hope it helps. 🙂
Can you do it without the percentages except for the 90%?
As in, total W2Gs=$30,000.
Total coin in on W/L statement (or diary etc) is $100,000.
Tax bracket…can you do three mid-higer tax brackets?
As opposed to Henry, I am a mathematical (and tax) dunce.
Thanks.
No. Learn to say “please”.
Thanks, Mike, for your corrections to my post and also for the additional information provided. I was wondering about the occasional statements that High Limit Slot Rooms will eventually become largely empty due to the new gambling tax law. If you happen to have an opinion on that, please post a blog for me to read. Much appreciated.
There will be an impact, but I don’t think it will be nearly as large as you think. Players like you with an eye for logic and are seeking being close to break even or a profit, are rare. Most gamblers are there to gamble, and don’t mind losing thousands in their recreational play. This is what casinos are built on. So, they will continue to play and pay the additional taxes.
At the risk of what I am saying starting a new long debate (which I won’t get into), I’ll just state that despite what many think and say, the tax bill does not change the W2-G limit to $2,000. Reporters who first reported this were not quoting tax professionals and so got it wrong. The section of the bill they are getting this from is actually addressing making the 1099-K threshold $2,000. As I said, I’m not going to start a debate on this. In about a month, when the first person gets a $1,500 W-G and posts about it, everyone will suddenly realize this.
This is my understanding as well.
Have you ever considered only
gambling with video poker in
Canada, there would be no tax
problems of any kind
That would be a great idea if you could find some good video poker in Canada. I live there and it’s been a long time since I’ve seen a good play here.
Since Golden Gate doesn’t usually do temporary promotions, I assume Bob showed up before 6 pm for “The Night Starts Here” daily promotion, which does give everyone with a player’s card that walks in the door $5-$1000, which is NOT valid on video poker.
https://www.goldengatecasino.com/downtown/the-night-starts-here/
Also, the D technically has five doors – the one by what used to be McDonald’s, the one by American Coney Island, the door from the parking structure, the rear door adjacent to valet, and the second floor door to Vue Bar.